WSIB and OHS for Employers in Ontario – September 2010

WSIB Update

September 28, 2010 – An evening with David Marshall, New WSIB President

On Tuesday evening, in downtown Toronto, a small group of very dedicated WSIB professionals had the opportunity to hear David Marshall speak about the WSIB‟s unfunded liability. Mr Marshall is the new President and CEO of the WSIB (see our August Bulletin). Given the mess he has willingly stepped into, we should assume (or at least hope) that this gentleman loves a challenge, is a top-notch administrator, and has tremendous regard for OPM (other people’s money). Time will tell, but it is comforting to know that as a former Assistant Auditor General and Deputy Receiver General for Canada, he knows how to count and can read a balance sheet.

Mr Marshall started with a brief historical genuflection to 1915, the „historical compromise‟ and the founding Meredith principles. Then he began his talk about the 12 billion dollar unfunded liability by telling us that “the WSIB is a good sound system and we should nurture it, protect it, and improve it”. In asking the rhetorical question “how did we get into this position”, Mr Marshall‟s answer will disappoint many of the 230,000 registered employers in Ontario.

Here is what he said:

Premiums have not kept up with claim costs

Businesses have to pony up

“Businesses have run up a 12 billion dollar tab”

“In fact this is money owed by employers to injured workers”

“We should ask employers what have they done with the 12 billion dollars”

And how are we going to get out of this situation, he asked:

First, the unfunded liability will rise to 13-14 billion dollars in the next 3-4 years. It will take time to control, about 10-15 years (presumably this is different from the unfunded liability of the 1990s that they promised to pay down by 2014)

We will have another major consultation

There will have to be steady premium increases for the next 10-15 years

It is a shared responsibility to fix the problems within the compensation systemSome disturbing information:

There are 250,000 claims in the WSIB inventory that have a projected lifetime cost of 45 billion. We would need 23 billion in the bank today to meet the obligations of these 250,000 claims, or 45 billion in the future. [Well, if that‟s the case, then the unfunded liability currently sits at 23 billion, not 12 billion – that‟s what an unfunded liability is, the current shortfall to generate the future liabilities.]

Currently, Ontario has the highest premium rates in the country [According to the Association of Workers‟ Compensation Boards of Canada, Ontario is actually 4th on the list; but why be picky?]

Ontario also has the highest rate of Permanent Impairment injuries in the entire country.[Again, the AWCBC doesn‟t think so – and it must be understood that other provinces don’t regularly provide permanent awards for the hazards of aging, just the effects of injury.]“Our Goal”:

According to Mr. Marshall, it’s to “protect the benefits to injured workers”

To nurture, protect, and improve the WSIB system

How about creating a system that is fair, accountable, and financially responsible?[Cézanne’s goal]
Questions from the Audience that deserved a standing ovation:Q . It appears the Board is having an identity crisis. Will this next set of consultations answer whether or not the WSIB wants to be an insurance agency, or a social service agency? (Thank you, Jason)A. …[dodged]Q. The WSIB appears to be on the verge of being sucked into a vortex of financial collapse. Are there any plans for a major re-thinking and re-structuring similar to Ontario Hydro that would break the WSIB up into manageable parts that are more in alignment with their original purpose? It would appear that all we are doing is re-arranging the deck chairs on the

Titanic. (What a fantastic question, Norm).

A. “cutting off parts, would be like re-arranging the deck chairs” [Can‟t you hear the chorus starting up? “It‟s a good sound system, we should nurture, protect, and improve it.”]

Q. Oh yes, and the eloquent and insightful chair of this meeting asked about the rumors regarding a 6- Year NEER Window, and the end of SIEF (Stephen).

A. Yes, a 6-year NEER window IS coming for sure. [The answer to the SIEF question was unclear; it appeared that the President and CEO did not really understand SIEF since he started talking about recurrences. And as SIEF is funded out of premium dollars, should we assume premium rates would decrease commensurately with eliminated SIEF? And if SIEF is on its way out, does that mean the Hamilton-based „No, you can‟t have any‟ desk will need to be transferred to the new “work reintegration” (formerly known as LMR, department)?]

One Ray of Hope:

There WILL be a Value for Money Audit to examine the “Adjudication Process”. However, my concern is that employers are so jaded and tired of consultations that go nowhere, they will not even lift their heads to participate in yet another round.

After hearing Mr Marshall‟s brief talk on Tuesday evening, I am quite certain that either he has a lot to learn about WSIB, or his speechwriters missed the boat (Carpathia).

Personally, I think there should be an absolute moratorium, both on premium increases and further “consultations” (how much do these things cost?) until WSIB offers employers some very substantial cost cutting and significant trimming within the system first. Perhaps they could start with

their bloated management level – of the nearly 5,000 employees at WSIB, only about 1,000 actually do the work of managing claims and benefits. And there are close to 300 of their staff earning in excess of $100K per year.